Can you live off your investments/savings?!

Dazed_and_confused

Make sure you find a prospective spouse with enough dividend and interest!

short_butt_sweet

Dazed_and_confused wrote: »

Make sure you find a prospective spouse with enough dividend and interest!

i'm just updating my dating profile to cover this

patient_investor

On that note, what ETF/tracker would you use to draw high income from your investment in stock market? I am investing in HSBC FTSE All World Acc version, sometime in the future I will change it to income fund to draw from it and I will certainly reduce equity percentage. Do you have any recommendations? Vanguard funds their income versions only pay 1.5% per annum I think.

takesyourchances

pioruns wrote: »

On that note, what ETF/tracker would you use to draw high income from your investment in stock market? I am investing in HSBC FTSE All World Acc version, sometime in the future I will change it to income fund to draw from it and I will certainly reduce equity percentage. Do you have any recommendations? Vanguard funds their income versions only pay 1.5% per annum I think.

There is a Vanguard High Dividend EFT with a dividend yield of 3.49% at the momment https://www.hl.co.uk/shares/shares-search-results/v/vanguard-funds-plc-ftse-world-high-div-yld


I am sure others can answer. Interesting topic this as the long goal for many investing is to draw an income

bd10

My strategy is simple: DIY shares ISA is the main pot for which I target close to the ISA allowance. The secondary pot will come through the work pension scheme. That alone would not be sufficient, plus the uncertainty how the government will tax when taking the money out, that's why I chose the ISA as main vehicle. The "annuity" I intend to manually draw out (selling off investments bit by bit), so there still will be a decent yield of the then shrinking pot during retirement. This way I expect to get an annuity which is vastly better than when buying an off the shelf pension plan.

colsten

bd10 wrote: »

.... plus the uncertainty how the government will tax when taking the money out....

You are right, we don't know how we will be taxed when we come to draw the money out of pensions. Don't be mistaken, though, we also don't know that we will definitely get our ISA money without further taxation. It would cause uproar but I wouldn't discount the possibility that a future government would levy taxes on it. We have already seen politicians calling for a 'wealth tax', and who is to say people with ISAs would be spared.

Aminatidi

prezzacc wrote: »

Really interesting reading!

As mentioned I've only taken more of an interest recently in finances and personally on current conditions couldn't see me living off interest. I've only just started to invest and to test the waters looking at the Lifestrategy 80 but it's literally a couple thousand that's all. Being in 30s I know I'm too late for it really to be anything to amass too!

Would anyone like to guesstimate what sort of value say in a passive index investment you would be happy to retire on? Or would it really be nearly 900k!

I don't think it's too late, you simply need to have a plan and be comfortable (and able!) to be putting more away than if you'd started much earlier.

The simple fact you're here thinking about it probably means you're ahead of 95% of people.

Thrugelmir

ruperts wrote: »

Using a 4% withdrawal rate you'd need £250k plus being mortgage free to fund that lifestyle, which is a perfectly viable target for anyone starting in their 30's.

You'd be eternally fretting that 4% is far too optimistic though. Doesn't leave much for major items of expenditure either.

bd10

colsten wrote: »

You are right, we don't know how we will be taxed when we come to draw the money out of pensions. Don't be mistaken, though, we also don't know that we will definitely get our ISA money without further taxation. It would cause uproar but I wouldn't discount the possibility that a future government would levy taxes on it. We have already seen politicians calling for a 'wealth tax', and who is to say people with ISAs would be spared.

I am very scared of that. Fast forward 20 years and the pension crisis will be in full swing. Pension money which is locked away is easy prey, and ISAs are likely to be an easy mark too. The only hedge here is that I can withdraw/move all funds, shares etc elsewhere. A concrete plan B I don't have in that scenario but at least my savings are 100% accessible.

GDB2222

Thrugelmir wrote: »

You'd be eternally fretting that 4% is far too optimistic though. Doesn't leave much for major items of expenditure either.

It's probably okay to draw all the income and spend it, providing the investments are likely to keep pace with inflation.

I don't see how you can safely draw down a lot of capital, though. Say you target a life expectancy of 30 years. If you are alive at the end of that, you may have a life expectancy at that point of another 7 or 8 years. And so on. Plus, your final years of life are likely to be very expensive, as that's when you need the most care.

You may want to spend all your money during your lifetime, as you can't take it with you, but it's a difficult trick to pull off without risking being destitute in very late life.